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| Nobuo Matsubayashi and Tatsuya Hashimoto |
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| ''Horizontal merger of differentiated firms with product consolidation: the effect of change in substitutability'' |
| ( 2010, Vol. 30 No.1 ) |
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| This paper studies an effect of a horizontal merger where a product consolidation by the merged firm may alter the substitutability in the industry. We show that as the number of firms in the industry increases, this type of merger becomes profitable for merging firms, while unprofitable for non-merging firms. Furthermore, we show that with a moderate level of change in the substitutability, the merger of a larger number of firms with a product consolidation is not necessarily profitable for merging firms. |
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| Keywords: Horizontal merger, Cournot oligopoly, Brand synergy effect |
JEL: L1 - Market Structure, Firm Strategy, and Market Performance: General
L2 - Firm Objectives, Organization, and Behavior: General |
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| Manuscript Received : Aug 24 2009 | | Manuscript Accepted : Jan 11 2010 |
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